UBS anticipates global airline profits will expand in the mid-single digits next year, with net earnings projected to rise from $32 billion in 2024 to $35 billion, based on IATA’s forecasts.
The bank expects passenger traffic to grow 6.5% in 2025, slightly above IATA’s 5.8% projection, with year-to-date growth currently at 5.8%. Passenger fares are forecast to dip roughly 1%, reflecting lower fuel costs and potentially softer demand.
Within UBS’s coverage universe, net profits are expected to climb from approximately $23 billion to $24.9 billion. Airfreight volumes are projected to see a modest increase for the year, despite a predicted 1% decline in the second half of 2025.
Seat capacity is expected to expand in both halves of 2025, particularly in Africa, Central America, and the Middle East. Europe faces tighter constraints, while Australasia is experiencing a reduction in capacity. UBS projects 6% global capacity growth against 6.5% traffic growth, a dynamic that could support fare increases. Capacity restrictions are largely due to aircraft delivery delays, maintenance limits, and staffing issues, although UBS sees potential improvement from manufacturers’ delivery schedules.
The report notes that airline balance sheets remain well-capitalized and valuations appear appealing. Comparing estimated 2025 return on invested capital (ROIC) with historical enterprise value per flight seat (EV/FSC) indicates potential upside exceeding 50%.
UBS highlighted its preferred carriers by region: Ryanair and Lufthansa in Europe, Cathay Pacific in Asia-Pacific, United Airlines (NYSE:UAL) and Delta Airlines (NYSE:DAL) in North America, and Copa Airlines in Latin America.
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